Popular Chinese short video app TikTok is working with brands to test in-app sales in Europe, a move that will intensify its competition with US-based social media mammoth Facebook and further blur the line between social media and online shopping.
The video app, owned by ByteDance, is hoping to replicate the success of its Chinese-only cousin Douyin, which gathered $26 billion of eCommerce transactions in just its first year of operation. TikTok has begun working with merchants in markets including the UK on ways they can sell products directly to millions of users within the app.
Global eCommerce service
While TikTok has run promotional shopping campaigns in the past, the current trials seem to be the first step to a broader launch of a global eCommerce service. The prototype so far is only visible to select participants and it remains unknown when the company will kick off the formal launch.
ByteDance is moving aggressively into a $1.7 trillion Chinese eCommerce unit in hopes of adding another mega-growth story ahead of a much-anticipated initial public offering (IPO). By 2022, it aims to handle more than $185 billion of eCommerce annually. Unlike Chinese rivals Alibaba Group or Tencent Holdings, ByteDance’s apps also enjoy a broad global fan base and co-founder Zhang Yiming wants to use that to its advantage while venturing into online commerce.
Online retail boom
The move comes as social media titans around the world are scrambling to grab their share of online retail, a segment that will generate $5 trillion in sales this year, according to projections. Last May, Facebook introduced new tools to improve shopping experience on its platform as well as photo-sharing app Instagram while Pinterest has also stepped into eCommerce by channeling buyers to merchants’ websites.
Meanwhile, TikTok aims to lock users inside its ecosystem to a greater degree. Brands will run dedicated stores on the video platform, taking orders from and interacting directly with shoppers. While the Chinese company won’t handle sales or merchandise itself, it hopes to sell more ads to merchants, boost traffic and take a cut of business.
Back in December 2020, Mr. Zhang told global employees that eCommerce, when combined with live-streaming and short videos, offers an even bigger opportunity outside China. The company has also been quietly building a team of engineers in Singapore to grow TikTok’s nascent eCommerce operations.